When an individual can no longer pay for his or her medical bills, he or she is undergoing medical bankruptcy. This type of bankruptcy is common in countries that do not have social healthcare or for jurisdictions that do not provide health insurance.
Bankruptcy refers to the inability of an entity to pay his or her debts. Thus, medical bankruptcy is easily attained by individuals who cannot afford health insurance or for those who only do out-of-pocket payments. When an individual cannot make payments on his or her debts on time, his or her property that was used as collateral for the debt may be seized and sold in an effort to recoup the losses suffered by the agency that the individual is indebted to.
If a person declares medical bankruptcy, he or she is subject to a lengthy process of verification and investigation. The judge who instigates such legal proceedings must substantiate the claims made by the individual. His or her assets will be reviewed along with his or her medical history. Once the process of investigation is done, the judge may approve or reject the filing of medical bankruptcy based on the findings of such an investigation. If the judge approves of the application for medical bankruptcy, the individual is no longer burdened to pay back in full the debt he or she owes. However, a person who files any type of bankruptcy may find it difficult to apply for loans or credit given that he or she now has a history of being unable to pay back his or her debts.